Section 22 : Income From House Property.

Statutory Provisions.

22. Income from house property.- The annual value of property consisting of any buildings or
lands appurtenant thereto of which the assessee is the owner , other than such portions of
such property as he may occupy for the purposes of any business or profession carried on by
him the profits of which are chargeable to income-tax, shall be chargeable to income-tax
under the head Income from house property.
23. Annual value how determined.- (1) For the purposes of section 22, the annual value of
any property shall be deemed to be
(a) the sum for which the property might reasonably be expected to let from year to year; or
(b) where the property or any part of the property is let and the actual rent received or
receivable by the owner in respect thereof is in excess of the sum referred to in clause (a), the
amount so received or receivable; or
(c) where the property or any part of the property is let and was vacant during the whole or
any part of the previous year and owing to such vacancy the actual rent received or receivable
by the owner in respect thereof is less than the sum referred to in clause (a), the amount so
received or receivable :
Provided that the taxes levied by any local authority in respect of the property shall be
deducted (irrespective of the previous year in which the liability to pay such taxes was
incurred by the owner according to the method of accounting regularly employed by him) in
determining the annual value of the property of that previous year in which such taxes are
actually paid by him.

Explanation.For the purposes of clause (b) or clause (c) of this sub-section, the amount of
actual rent received or receivable by the owner shall not include, subject to such rules as may
be made in this behalf, the amount of rent which the owner cannot realise.
(2) Where the property consists of a house or part of a house which
(a) is in the occupation of the owner for the purposes of his own residence; or
(b) cannot actually be occupied by the owner by reason of the fact that owing to his
employment, business or profession carried on at any other place, he has to reside at that
other place in a building not belonging to him,
the annual value of such house or part of the house shall be taken to be nil.
(3) The provisions of sub-section (2) shall not apply if
(a) the house or part of the house is actually let during the whole or any part of the previous
year; or
(b) any other benefit therefrom is derived by the owner.
(4) Where the property referred to in sub-section (2) consists of more than one house
(a) the provisions of that sub-section shall apply only in respect of one of such houses, which
the assessee may, at his option, specify in this behalf;
(b) the annual value of the house or houses, other than the house in respect of which the
assessee has exercised an option under clause (a), shall be determined under sub-section (1)
as if such house or houses had been let.


24. Deductions from income from house property.- Income chargeable under the head
Income from house property shall be computed after making the following deductions,
namely:
(a) a sum equal to thirty per cent of the annual value;
(b) where the property has been acquired, constructed, repaired, renewed or reconstructed
with borrowed capital, the amount of any interest payable on such capital:
Provided that in respect of property referred to in sub-section (2) of section 23, the amount of
deduction shall not exceed thirty thousand rupees :
Provided further that where the property referred to in the first proviso is acquired or
constructed with capital borrowed on or after the 1st day of April, 1999 and such acquisition
or construction is completed within three years from the end of the financial year in which
capital was borrowed, the amount of deduction under this clause shall not exceed one lakh
fifty thousand rupees.


Provided also that no deduction shall be made under the second proviso unless the assessee
furnishes a certificate, from the person to whom any interest is payable on the capital
borrowed, specifying the amount of interest payable by the assessee for the purpose of such
acquisition or construction of the property, or, conversion of the whole or any part of the
capital borrowed which remains to be repaid as a new loan.

Explanation.For the purposes of this proviso, the expression new loan means the whole
or any part of a loan taken by the assessee subsequent to the capital borrowed, for the purpose
of repayment of such capital.

25. Amounts not deductible from income from house property.-25. Amounts not deductible
from income from house property.- Notwithstanding anything contained in section 24, any
interest chargeable under this Act which is payable outside on which tax has not been paid or
deducted and in respect of which there is no person in India who may be treated as an agent ,
shall not be deducted in computing the income chargeable under the head Income from
house property.
26. Property owned by co-owners.- Where property consisting of buildings or buildings and
lands appur- tenant thereto is owned by two or more persons and their respective shares are
definite and ascertainable, such persons shall not in respect of such property be assessed as an
association of persons, but the share of each such person in the income from the property as
computed in accordance with sections 22 to 25 shall be included in his total income.
27. Owner of house property, annual charge, etc., defined.- For the purposes of sections
22 to 26
(i) an individual who transfers otherwise than for adequate consideration any house property
to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a
minor child not being a married daughter, shall be deemed to be the owner of the house
property so transferred;
(ii) the holder of an impartible estate shall be deemed to be the individual owner of all the
properties comprised in the estate ;
(iii) a member of a co-operative society, company or other association of persons to whom a
building or part thereof is allotted or leased under a house building scheme of the society,
company or association, as the case may be, shall be deemed to be the owner of that building
or part thereof ;
(iiia) a person who is allowed to take or retain possession of any building or part thereof in
part performance of a contract , shall be deemed to be the owner of that building or part
thereof ;
(iiib) a person who acquires any rights (excluding any rights by way of a lease from month to
month or for a period not exceeding one year) in or with respect to any building or part
thereof, shall be deemed to be the owner of that building or part thereof;
(vi) taxes levied by a local authority in respect of any property shall be deemed to include
service taxes levied by the local authority in respect of the property.
Case Laws.
1. C.I.T. v. BimanBehari (68 ITR 815)
Facts.
One BankuBehariSaha executed a will on November 24, 1925, and dedicated several
properties to two deities installed by him, namely, Sri SriIswarBenodeBehari and Sri
SriIswarBenodeswarMahadev at two of the dedicated properties, namely, No. 12,
BenodeBehariSaha Lane and No. 122A, Manicktola Street, both in the town of Calcutta.

The dedication in the Will opens with the following paragraph:
According to the wishes of my revered father I have built the edifice of a temple, a
Thakurbari at premises No. 12, BenodeBehariSaha Lane, in close proximity to our said
family dwelling house and have installed therein the deity of Sri SriIswarBenodeBehari (an
image of Sri SriIswarRadha Krishna) and SriIswarBenodeswarMahade and have been
performing the Puja worship and seva, etc. of the same.
This property is my estate long enjoyed and possessed.
By this instrument of Will I dedicate to the deity Sri SriIswar
BenodeBehari and Sri SriIswarBenodeswarMahadev established by me the properties as
included in the schedules of this will .
From the time of my death the aforesaid properties shall be used in the aforesaid Dev Seva
and for pious acts.
Nobody save and except the Brahmin performing the Worship of the deity and servants shall
ever be competent to reside in the said property and the said Thakurbari shall never be used
as a place of agitation and meeting or for any public functions.
Under the provisions of the Will , a temple was actually constructed on the site.


For the relevant assessment years , the Income-tax Officer computed the bona fide annual
value of these premises at the amounts which they were likely to fetch if let out in the open
market.

The assessee objected to the assessment of an annual value of the two premises and appealed
before the Appellate Assistant Commissioner.
The reasons which appealed to the Appellate Assistant Commissioner were:
The premises situated in Calcutta are the temples of the two deities .
These premises have not been let out and no income accrues therefrom.
The Income-tax Officer therefore was not justified in adding any income on account of these
premises. In the earlier assessment no such addition has been made.
The addition of any amount as letting value from these two properties would be therefore
deleted in each of the two assessments under appeal.
In the above view the Appellate Assistant Commissioner allowed the objection of the
assessee.
Against the order of the Appellate Assistant Commissioner, the revenue appealed before the
Appellate Tribunal.
The Appellate Tribunal agreed with the order of the Appellate Assistant Commissioner
deleting the bona fide income from two premises mentioned above with the following
observations:
The Income-tax Officer computed the bona fide annual value of the house at the amount
which they are likely to fetch if let out in the open market. The Appellate Assistant
Commissioner has, however, found that these premises were not let out and no income
accrued therefrom to the assessee.
In fact, the Will specifically says that nobody save and except the priest performing the
worship of the deity and its servants shall ever be competent to reside in the temple and it
shall never be used as a place of agitation or meeting or for the sake of any public function.
In view of the injunctions contained in the will against the residence of any body in the
premises apart from the priest performing the worship of the deity and its servants, it is quite
obvious that these premises have no letting value and the Appellate Assistant Commissioner
was, therefore, justified in excluding from the assessment the annual value thereof.
Thereupon, the Commissioner of Income-tax, appealed on the following point of law:
Whether, on the facts and in the circumstances of the case, the Tribunal misdirected itself in
law in holding that premises in question situated I Calcutta, had no bona fide annual value
under the Income-tax Act?


Provisions regarding income from house property under the Income-tax Act, states that :
The tax shall be payable by the assessee under the head income from property in respect of
the bona fide annual value of property consisting of any buildings or lands appurtenant
thereto of which he is the owner, other than such portions of such property as he may occupy
for the purposes of any business, profession or vocation carried on by him the profits of
which are assessable to tax.
The annual value of any property shall be deemed to be the sum for which the property might
reasonably be expected to let from year to year.
It is clear from the provisions regarding income from house propety that even where a
property is not let and even where it does not produce any income, the Income-tax Officer is
to proceed on the basis of a notional income, which the property might reasonably be
expected to yield from year to year.
Where a property is not actually let, even then there ought to be included in the annual
income of the owner a notional income from the property.
The letting value of a property, whether let or not, can be objectively ascertained on
reasonable basis.
If there be restrictions on the letting of the premises, that may merely reduce the letting value
but it cannot be said, without more, that because of the existence of a restrictive clause there
can be no notional annual income deemed to arise from the premises.


This proposition of law has been supported by two decisions of the Bombay High Court,
namely,
D.M. Vakil v. Commissioner of Income-tax [(1946) 14 I.T.R. 298] and
SirCurrimbhoyEbrahim Baronetcy Trust v. Commissioner of Income-tax [(1963) 48 I.T.R.
507].

In D.M. Vakil v. Commissioner of Income-tax , it was held that ;

The legislature has expressly provided that the tax shall be payable bythe assessee in respect
of the bona fide annual value irrespective of the questionwhether he receives the value or not.
The Income Tax Act provides that for the purposes of the expression annual value shall be
deemed to mean the sum for which the property might reasonably be expected to let from
year to year.


It is again significant to note that the word used is might and not can or is.
Reading the provisions , it is clear that the income from property is thus an artificially
defined income and the liability arises from the fact that the assessee is the owner of the
property.
It is further provided that if the owner occupies the property he has to pay tax calculated in
the manner provided therein.Therefore, by reason of the fact that the property is not let out,
the assessee does not escape taxation.
The argument that in the present case the trustees are prevented from letting out the property
to any one makes no difference.
The liability to tax does not depend on the power of the owner to let the property as it also
does not depend on the capacity of the owner to receive the bona fide annual value of the
property.
The law has laid down an artificial rule by which the amount is to be considered the income
of the assessee from immovable property and provided that he should be taxed on that
footing.
Therefore the argument of the Revenue on this point is correct.


In that view of the law, we have to uphold the contention of the Revenue, that the Tribunal
was not correct in holding that, in view of the injunction contained in the will against the
residence of any body in the premises (apart from the priest performing the worship of the
deity and its servants), the premises have no letting value.
That injunction in the will be of relevant consideration in finding out the bona fide value and
the weight of the injunction may very much reduce the bona fide letting value of the house.
But because of the existence of the injunction, the premises cannot be said to have no letting
value, notional or otherwise.In this view answer the question referred is in the affirmative
and in favour of the revenue.
2. East India Housing & Land Deveopment Trust Ltd. v. C.I.T.
(1961) 42 ITR 49

Facts .

The appellant assessee is a private company registered under the Indian Companies Act
incorporated with the following objects amongst others,
(1) to buy and develop landed properties, and
(2) to promote and develop markets. \
In 1946, the company purchased ten bighas of land in the town of Calcutta and set up a
market therein.
The appellant constructed shops, and stalls on platforms on that land. For the relevant
Assessment Year , the appellant received Rs 53,145 as income from the tenants of shops and
Rs 29,721 from the tenants or occupants of stalls.
The Income Tax Officer assessed the income derived from shops and stalls under Section 22
of the Income Tax Act.
The order of assessment was confirmed in appeal by the Appellate Assistant Commissioner
and by the Tribunal.
The appellant has obtained special leave to appeal against the order of the Tribunal.
Contention of the appellant assessee.
The appellant contends that because it is a company formed with the object of promoting and
developing markets, its income derived from the shops and stalls is liable to be taxed under
Section 28 of the Income Tax Act as profits or gains of business and that the income is not
liable to be taxed as income from property under Section 22 of the Act.

Reasoning of the Court.
The appellant is undoubtedly under the provisions of the Calcutta Municipal Act, required to
obtain a licence from the Corporation of Calcutta and to maintain sanitary and other services
in conformity with the provisions of that Act and for that purpose has to maintain a staff and
to incur expenditure.
But on that account, the income derived from letting out property belonging to the appellant
does not become profits or gains from business under the Income Tax Act.

Under the Income Tax Act, the following six different heads of income are made chargeable,
(1) salaries,
(2) interest on securities,
(3) income from property,
(4) profits and gains of business, profession
(5) income from other sources and
(6) capital gains.
This classification under distinct heads of income, profit and gain is made having regard to
the sources from which income is derived.
Income Tax is undoubtedly levied on the total taxable income of the tax payer and the tax
levied is a single tax on the aggregate taxable receipts from all the sources: it is not a
collection of taxes separately levied on distinct heads of income.
But the distinct heads specified in the Act indicate that the sources are mutually exclusive
and income derived from different sources falling under specific heads has to be computed
for the purpose of taxation in the manner provided by the appropriate section.
If the income from a source falls within a specific head , the fact that it may indirectly be
covered by another head will not make the income taxable under the latter head.
The income derived by the company from shops and stalls is income received from property
and falls under the specific head described in Section 22.
The character of that income is not altered because it is received by a company formed with
the object of developing and setting up markets.

Referred cases.
In the United Commercial Bank Ltd., Calcutta v. CIT [(1958) SCR 79]
The Court explained that under the scheme of the Income Tax Act, the heads of income,
profits and gains enumerated , are mutually exclusive, each specific head covering items of
income arising from a particular source.
In Fry v. Salisbury House Estate Ltd. [LR (1930) AC 432]
a company formed to acquire, manage and deal with a block of buildings having let out the
rooms as unfurnished offices to tenants was held chargeable to tax under head of income
from property and not under the head of income from business or profession.
The company provided a staff to operate the lifts and to act as porters and watch and protect
the building and also provided certain services, such as heating and cleaning to the tenants at
an additional charge.
The taxing authorities sought to charge the income from letting out of the rooms as receipts
of trade chargeable, but that claim was negatived by the House of Lords holding that the rents
were profits arising from the ownership of land assessable under income from property
and that the same could not be included in the assessment under business income as trade
receipts.

In Commercial Properties Ltd. v. CIT [(1928) 3 ITC 23]
income derived from rents by a company whose sole object was to acquire lands, build
houses and let them to tenants and whose sole business was management and collection of
rents from the said properties, was held assessable under Section 22 and not under Section 28
of the Income Tax Act.
It was observed in that case that merely because the owner of the property was a company
incorporated with the object of owning property, the incidence of income derived from the
property owned could not be regarded as altered; the income came more directly and
specifically under the head property than income from business.
The income received by the appellant from shops is indisputably income from property: so is
the income from stalls from occupants.
The character of the income is not altered merely because some stalls remain occupied by the
same occupants and the remaining stalls are occupied by a shifting class of occupants.
The primary source of income from the stalls is occupation of the stalls, and it is a matter of
little importance that the occupation which is the source of the income is temporary.
The Revenue Authorities were therefore right in holding that the income received by the
appellant was assessable under Section 22 of the Income Tax Act.
The appeal therefore fails and is dismissed with costs.
2. R.B. Jodha Mal Kuthiala v. C.I.T.(1971) 3 SCC 369
Facts:
The assessee is a registered firm deriving income from interest on securities, property,
business and other sources. Sometime in the year 1946 it purchased the a Hotel in Lahore for
a sum of Rs 46 lakhs. For that purpose it raised a loan of Rs 30 lakhs from M/s Bharat Bank
Ltd., Lahore and a loan of Rs 18 lakhs from the Raja of Jubbal.
The loan taken from the bank was partly repaid but as regards the loan taken from the Raja,
the assessee came to an agreement with the Raja under which the Raja accepted a half share
in the said property in lieu of the loan advanced and also 1/3rd of the outstanding liability of
the bank.
This arrangement came into effect on November 1, 1951. After the creation of Pakistan,
Lahore became a part of Pakistan. The Hotel was declared an evacuee property and
consequently vested in the Custodian in the Pakistan.
In its return for the three relevant assessment years, the assessee claimed losses of Rs
1,00,723, Rs. 1,16.599 and Rs 1,16,599 respectively but showed the gross annual letting
value from the said property at Nil. The loss claimed was stated to be on account of interest
payable to the bank.
Since the property in question had vested in the Custodian of Evacuee Property, in Pakistan,
the Income-tax Officer held that no income or loss from that property can be considered in
the assessees case. He accordingly disallowed the assessees claim in respect of the interest
paid to the bank.
The Appellate Assistant Commissioner confirmed the order of the Income-tax Officer.
In second appeal the Tribunal came to the conclusion that the assessee still continued to be
the owner of the property for the purpose of computation of loss. The Tribunal held that the
interest paid is a deductible allowance .
However at the instance of the assessee , the Tribunal submitted the following question for
consideration of the High Court:
whether on the facts and in the circumstances of the case, the assessee continued to be the
owner of the property for the purposes of computation of income under Section 22 of the
Income-tax Act.

The High Court on an analysis of the various provisions of the Pakistan (Administration of
Evacuee Property) Ordinance, 1949 came to the conclusion that for the purpose of Section 22
of the Act, the assessee cannot be considered as the owner of that property.
Contention of the assessee.
It was contented that the High Court erred in opining that the assessee was not the owner of
the property, for the purpose of Section 22 of the Act. The property vested in the Custodian
only for the purpose of administration and the assesse still continued to be its owner.
The expression owner means the person having the ultimate right to the property. So long
as the assessee had a right to that property in whatever manner , that right might have been
hedged in or restricted, he still continued to be the owner.
Contention of the Revenue
It was contended on behalf of the Revenue that the income-tax is concerned with income,
gains and profits. Therefore for the purpose of that Act, the owner is that person who is
entitled to the income. Therefore the word owner in Section 22 refers to the legal
ownership and not to any beneficial interest in the property.
Reasoning of the Court.
For deciding the question whether the assessee was the owner of the property for the purpose
of Section 22 of the Act during the relevant accounting years, we have to look to the
provisions of the Ordinance governing administration of evacuees property in Pakistan.

It provides that all evacuee property shall vest and shall be deemed always to have vested in
the Custodian with effect from the 1st day of March, 1947. The Custodian has powers to
take possession of the evacuee property. M The Ordinance permits the Rehabilitation
Authority to allot evacuee property to the refugees.
The Ordinanace empowers the Custodian to restore the evacuee property to the lawful owner
subject to such conditions as he may, be pleased to impose.
The Custodian is also empowered to ..
(i) sell any evacuee property, notwithstanding anything contained in any law or agreement to
the contrary relating thereto.
(ii) The Custodian may also demolish or dismantle any evacuee property which in his
opinion cannot be repaired, or sell the site of such property and the materials thereof.

Therefore a perusal of the Ordinance makes it clear that it is an Ordinance to provide for the
administration and management of evacuee property.
The expression administration in relation to an estate, in law means management and
settling of that estate. It is a power to deal with the estate.
The rights of the evacuee over the property has been curtailed to a great extent.
The evacuee could not take possession of his property.
He could not lease that property.
He could not sell that property without the consent of the Custodian.
He could not mortgage that property.
He could not realise the income of the property.

On the other hand,
the Custodian could take possession of that property.
He could realise its income.
He could alienate the property and he could under certain circumstances demolish the
property.

All the rights that the evacuee had in the property he left in Pakistan were exercisable by the
Custodian excepting that he could not appropriate the proceeds for his own use. The evacuee
could not exercise any rights in that property except with the consent of the Custodian. He
merely had some beneficial interest in that property.
No doubt that residual interest in a sense is ownership.
The property having vested in the Custodian, who had all the powers of the owner, he was the
legal owner of the property. In the eye of the law, the Custodian was the owner of that
property.
Section 22 of the Income Tax Act says that :
The tax shall be payable by an assessee under the head Income From Property in respect of
the bona fide annual value of property consisting of any buildings or lands apurtenant thereto
of which he is the owner, other than such portions of such property as he may occupy for the
purposes of any business, profession or vocation carried on by him the profits of which are
assessable to tax subject .
The question is who is the owner referred to in Section 22 ?
Is it the person in whom the property vests or is it he who is entitled to some beneficial
interest in the property?
It must be remembered that Section 22 brings to tax the income from property and not the
interest of a person in the property.
A property cannot be owned by two persons, each one having independent and exclusive
right over it.
Hence for the purpose of Section 22, the owner must be that person who can exercise the
rights of the owner, not on behalf of the owner but in his own right.
From the practical point of view also , if evacuees are considered as owners of the property,
it would create many difficulties.
If the thousands of evacuees who left practically all their properties as well as businesses in
Pakistan had been considered as the owners of those properties and businesses as long as the
Ordinance was in force then those unfortunate persons would have had to pay income-tax
on the basis of the annual letting value of their properties and on the income, gains and profits
of the businesses left by them in Pakistan though they did not get a penny out of those
properties and businesses.
It is true that equitable considerations are irrelevant in interpreting tax laws. But those laws,
like all other laws have to be interpreted reasonably and in consonance with justice.
Referred Cases.
The question as to who is the owner of a house property under Section 22 of the Act in
similar circumstances , came up for consideration before the Calcutta High Court in the
matter of The Official Assignee for Benga [5 ITR 233 (HC)].
In that case on the adjudication of a person as insolvent under the Insolvency Act, certain
house property of the insolvent vested in the Official Assignee.
The question arose whether the Official Assignee could be taxed in respect of the income of
the property under Section 22.
The Court held that the property did not by reason of the adjudication of the debtor cease to
be a subject fit for taxation and the Official Assignee was the owner of the property and he
could rightly be assessed in respect of the income from that property under Section 22.
The powers of the Custodian are no less than that of the Official Assignee .
The assesseeis trying to restrict the meaning of the word owner by putting before it the
qualifying adjective beneficial. What was argued was that the Official assignee had no
legal interest in the properties themselves, they were merely vested in him for the purposes of
the administration of them in the interest of the creditors of the insolvent.
But such contention cannot be accepted .
The Court in Official assignee case relied on the decision in The Commissioner of Inland
Revenue v. Fleming [14 TC 78].

That appeal related to a claim for refund of income-tax to which the respondent claimed to
be entitled in respect of personal allowance . The claim arose in the following
circumstances:
The respondent was owner of certain properties and was declared insolvent .During period of
insolvency , his properties vested with trustees. After some time he was discharged from
insolvency on payment of composition and was reinvested in his estate.
During the insolvency, the trustee paid income-tax on the full annual value of the properties
in question.


The contention of the respondent was that the right to these properties was in him all the
time, and that, in paying the tax, the trustee was really paying it on his behalf - that is on his
income and that consequently there arose in each of the years in which the payment was
made a right to deduct his personal allowance from the annual value of the properties.
The right to this abatement is said to have passed to the Respondent himself in virtue of the
reinvestment in his estate which occurred upon his discharge .
Rejecting this contention, the Court held that :
Unless during the years in question the annual value of the properties was income of the
Respondent, he cannot have any claim to abatement of it for income-tax purposes; and
accordingly everything depends upon the soundness of the proposition that the income
consisting in the annual value of those properties was truly income of the Respondent.
But this cannot be possibly described as income of the respondent.
It was part of the income arising from the estates vested in the trustee for the Respondents
creditors. Any income that did arise from those estates was income of the trustee as such,
and he and he alone had the right to put it into his pocket as income. It was not income that
went or could go into the pocket of the Respondent as income. How then can it be said to
have reached his pocket as income on his subsequent reinvestiture.
For determining the person liable to pay tax, the test laid down by the court was to find out
the person entitled to that income.
The appellant contended that despite the fact the evacuee property was taken over by the
Custodian and that he had been conferred with large powers to deal with it, an evacuee from
Pakistan who owned that property before he migrated to India still continued to be the owner
of the property.

For this contention reliance was placed on the observations in Amur Singh v. Custodian,
Evacuee Property, Punjab [AIR 1957 SC 599].
It was observed that :
The position, in its general aspect, is that all evacuee property is vested in the Custodian.
But the evacuee has not lost his ownership in it. The law recognised his ultimate ownership
subject to certain limitations. The evacuee may come back and obtain return of his property,
as also an account of the management thereof by the Custodian.


But observations in Amur Singhs case is of no help to appellant in the present case. Those
observations were made in a different context.
Therein, the question for consideration was whether the right of an evacuee in respect of the
property left by him in the country from which he migrated was property right for the purpose
such right guaranteed by the Constitution.
It cannot be denied that an evacuee from Pakistan has a residual right in the property that he
left in Pakistan. But the question is not regarding right to property in legal sense but the real
question is, can that right be considered as ownership within the meaning of Section 22 of the
Act.
Section 22 seeks to bring to tax income of the property in the hands of the owner. Hence the
focus of that section is on the receipt of the income.
The word owner has different meanings in different contexts. Under certain circumstances
a lessee may be considered as the owner of the property leased to him.
The appellant also pointed to the observations on concept of ownership in Pollock on
Jurisprudence :
Ownership may be described as the entirety of the powers of use and disposal allowed by
law.... The owner of a thing is not necessarily the person who at a given time has the whole
power of use and disposal; very often there is no such person. We must look for the person
having the residue of all such power when we have accounted for every detached and limited
portion of it; and he will be the owner even if the immediate power of control and use is
elsewhere.
However , ownership as legal right and ownership under Section 22 of the Income Tax Act
have different connotations.
The Income Tax Act is concerned with receipt of income from property and whosoever
receives the income from property , is the owner for the purpose of section 22. The fact that
any other person may have residual ownership does not make a difference to the position
with regard to receipt of income.
The appellant next placed relaince on the decision of the Calcutta High Court in
NawabBahadur of Murshidabad v. Commissioner of Income-tax. [28 ITR 510].
The facts of that case were:
Properties which belonged to the ancestors of the Nawab of Murshidabad as rulers, were,
some time after the territories had been conquered by the British, settled by the Secretary of
State for India , on the then Nawab of Murshidabad under a deed of settlement .
The settlement deed provided that :
Such properties shall henceforth and for ever be held and enjoyed by the Nawab and his
male heirs as may be successively entitled to hold the said title in perpetuity, with and subject
to the incidents, powers, limitations and conditions as to the inalienability and otherwise
hereinafter contained.
One of the conditions was that the Nawab was not entitled to sell or alienate the properties
except with the approval of the Governor of Bengal.
The question arose whether Nawab of Murshidabad was liable to pay tax in respect of the
income of those properties under Section 22 of the Act.
The Court held that;
Whatever might have been the original nature of the State properties, after the deed of
settlement , as the dual status of the Nawab as the holder of the estate and as an individual
ceased, it could not be said that the Nawab for the time being was not the owner of such
properties for the purposes of Section 22 of the Income Tax Act. Nawab was therefore liable
to be assessed to income-tax on the income of such properties.

The Court further held that the word owner in Section 22 of the Act applies to owners of
the whole income, even though they are under certain restrictions with regard to the
alienation of the properties. This decision therefore does not give any support to the
contentions of the appellant that he is the owner of the hotel for relevant time , it was under
the administration of Custodian of evacuees property in Pakistan.
Therefore under the circumstances of the case the assessee cannot be considered to be the
owner of Hotel in Pakistan during the relevant assessment years for the purpose of Section
22of the Act.
Hence the appeal fail and is dismissed.